• Completing your Australian income tax return

    To ensure that your tax return is filled out correctly and to prevent delays with your assessment you need to complete your tax return by following these instructions.

    Step 1

    Complete the Schedule of additional information.

    Step 2

    Attach your completed schedule to page 3 of your tax return. Print X in the Yes box at Taxpayer's declaration question 2a on page 8 of your tax return.

    Using e-tax

    To complete a schedule using e-tax, click on the Additional Information button in the e-tax interview screen - this button can be accessed at 'Spouse Details' screen (click on Spouse Details in the navigator bar). A blank notepad will be displayed. Enter the heading 'Schedule of additional information - Joint Petroleum Development Area' followed by the appropriate sentence, A, B, C or D, from the Schedule. For example, if you were a resident of Australia for the whole year you complete the Schedule as follows:

    Schedule of additional information - Joint Petroleum Development Area

    I was a resident of Australia for the whole year.

    Step 3

    Go to the Part or Parts that apply:

    • If you ticked A on the schedule of additional information of these instructions go to Part 1.
    • If you ticked B go to Part 2.
    • If you ticked C go to Part 3.
    • If you ticked D you may need to apportion your JPDA income and complete more than one Part. You will need to follow the instructions in:
      • Part 1 for that period you were a resident of Australia
      • Part 2 for that period you were a resident of Timor-Leste
      • Part 3 for that period you were a resident of another country.
       

    Part 1

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Use this part if you were an Australian resident for tax purposes.

    What you need

    • All your payment summaries for the 2004-05 income year.
    • Details of your JPDA income and any foreign tax paid - from your employer, your pay slips or foreign tax assessments.
    • TaxPack 2005 and TaxPack 2005 supplement if you are completing a paper tax return. See More information to find out how to get copies of these publications.

    You need to know

    You are taxed on your net assessable JPDA income at resident rates of tax with a foreign tax credit allowed for the lesser of:

    • the Australian tax payable on your net assessable JPDA income, and
    • the tax paid to Timor-Leste on that same income.

    What you need to do

    You will need to use worksheets 1 and 2 to complete the following items on your tax return:

    • Item 1 - income
    • Items D1 to D5 - work-related expenses
    • Item 19 - foreign source income.

    Follow these steps to complete your tax return:

    Step 1 Complete Worksheet 1 for each payment summary that includes JPDA income. This worksheet shows you how to deal with your JPDA income and deductions.

    Step 2 Complete all parts of your tax return except:

    • O item 19
    • Total supplement tax offsets
    • Item T
    • Total tax offsets

    Step 3 Complete Worksheet 2. This worksheet shows you how to work out your foreign tax credit in respect of your net assessable JPDA income. In the course of completing the worksheet, you will complete O item 19 on your tax return (supplementary section). If you are using e-tax, read Are you using e-tax? before starting Worksheet 2.

    Step 4 Complete the remainder of your tax return.

    Worksheet 1: Net JPDA income subject to tax in Australia and Timor-Leste

    Complete this worksheet for each payment summary showing JPDA income.

                                                                   Jose*                           You

    Total gross income shown on your payment summary

    (a)

    $120,000

    (a)

    $

    Total gross JPDA income included on your payment summary

    (b)

    $96,000

    (b)

    $

    Subtract (b) from (a)

    (c)

    $24,000

    (c)

    $

    Divide (b) by 10

    (d)

    $9,600

    (d)

    $

    Add (c) and (d). Write the amount at (e) at item 1 on page 3 your tax return.

    (e)

    $33,600

    (e)

    $

    Subtract (d) from (b). Include the amount at (f) at:

    • E item 19 on page 10 of your tax return (supplementary section)
    • the 'Foreign employment income' column (screen 2308), item 19 of e-tax.
     

    (f)

    $86,400

    (f)

    $

    Total work-related expenses directly related to your JPDA income.**

    (g)

    $500

    (g)

    $

    Divide (g) by 10. The amount at (h) is the amount of work-related expenses relating to your JPDA income. Show these expenses at D1 to D5 on your tax return or in e-tax.

    (h)

    $50

    (h)

    $

    Subtract (h) from (g). The amount at (i) is the total of your work-related expenses relating to your JPDA income (for the next step). If using e-tax, show the amount at (i) in the 'Deductible expenses' column (screen 2308), item 19 of e-tax.

    (i)

    $450

    (i)

    $

    Subtract (i) from (f). Include the amount at (j) at L item 19 (e-tax will do this automatically).

    (j)

    $85,950

    (j)

    $

    Subtract (g) from (b). The amount at (k) is your net assessable JPDA income.

    (k)

    $95,500

    (k)

    $

    See Example below

    **Work-related expenses are explained at items D1 to D5 in TaxPack and e-tax. If you have more than one payment summary with JPDA income, claim all your JDPA work-related expenses against the payment summary with the highest JPDA income (the amount at (f) on this worksheet).

    Example

    Jose, a driller, lived in Darwin (Zone A) when he was not at a drilling site. For part of the year he worked in the JPDA. Jose received a payment summary which showed $120,000 gross salary and wages and tax withheld of $26,664. He received a separate letter advising that the $120,000 included $96,000 relating to his period in the JPDA and that in addition to the $26,664 Australian tax withheld, $18,835 tax had been withheld and paid to Timor-Leste. Jose had work-related expenses of $700 of which $500 related to his work while in the JPDA. Jose contributed $500 to the Red Cross Tsunami appeal. He has no other income or deductions. Jose has no dependants. He has hospital cover.

    Refer to the worksheets to see how Jose would fill them in.

    Jose will receive a refund of $952 (i.e. $43,330 (tax payable) - $17,280 (foreign tax credit) - $338 (zone tax offset) - $26,664 (tax withheld)).

    If Jose had worked in Australia for the full year and had the same income and deductions, he would have completed the tax return differently and had a different tax withheld amount, but his refund would have been exactly the same.

    Are you using e-tax?

    Most people using e-tax will only need to complete (l) to (o) on Worksheet 2; e-tax does the remainder of the calculations for you.

    If you need to go past (o) you will need to complete the worksheet in full because you will have carry-forward foreign tax credits. You will have a carry-forward foreign tax credit if your 2005 foreign tax credit is less than the amount at (o). Your foreign tax credit is shown on the 'Tax offsets available' screen (screen 8102). You navigate to this screen from the 'Tax estimate' screen (8101), available on the navigator bar.

    When completing item 19 (screen 2308), show the amount you have at (o) on the worksheet in the 'Foreign tax withheld' column.

    If you want to work out the amount of your foreign tax credit for yourself, complete the worksheet in full.

    Completing the worksheet in full

    To complete Worksheet 2 in full you will need the amounts for your tax and Medicare items. These are available from your 'Tax estimate' screen (8101). Make sure you have completed all your income, deductions and Medicare items first.

    Did you have exempt foreign employment income?

    If you have included exempt foreign employment income you will not be able to calculate your foreign tax credit using Worksheet 2. We will do it for you when you lodge your tax return (using TaxPack, e-tax or a tax agent).

    On a separate sheet of paper, print:

    Schedule of additional information - Question 19 - Exempt foreign income, and write:

    • the amount of your JPDA income
    • the amount at (o) from Worksheet 2 (the foreign tax credit available on your JPDA income this year)
    • the amount at (q) from Worksheet 2 (your excess foreign tax credit carried forward from previous years)
    • the amount of any other foreign income and foreign tax paid.

    Sign your schedule and attach it to page 3 of your tax return with your other schedule.

    Check that you have printed X in the YES box at Taxpayer's declaration question 2a on page 8 of your tax return.

    Worksheet 2: Foreign tax credit calculation

                                                                   Jose*                           You

    Your taxable income as shown on your tax return

    (a)

    $118,800

    (a)

    $

    Calculate your tax using TaxPack (see Table 1 on page 122) or e-tax
    See note 1 below

    (b)

    $41,548.00

    (b)

    $

    Calculate your Medicare levy and Medicare levy surcharge (MLS) payable on your taxable income using TaxPack (see pages 126-28) or e-tax
    See note 1 below

    (c)

    $1,782.00

    (c)

    $

    Add (b) and (c)

    (d)

    $43,330.00

    (d)

    $

    Divide (d) by (a)

    (e)

    0.365

    (e)

    $

    Your net assessable JPDA income (the amount(s) shown at (k) in Worksheet 1)

    (f)

    $95,500

    (f)

    $

    Your gift deductions from (item D8 on your tax return)

    (g)

    $500

    (g)

    $

    Add (a) and (g)

    (h)

    $119,300

    (h)

    $

    Divide (a) by (h) (round to at least 3 decimal places)

    (i)

    0.996

    (i)

     

    Multiply (f) by (i) and round to nearest whole number. This is your adjusted net assessable JPDA income.
    See note 2 below

    (j)

    $95,118

    (j)

    $

    Multiply (e) by (j). This is the Australian tax payable on your adjusted net assessable JPDA income.

    (k)

    $34,718.07

    (k)

    $

    Your assessable salary and wage JPDA income that is assessed both in Australia and Timor-Leste (from (f) on Worksheet 1)

    (l)

    $86,400

    (l)

    $

    Any other amounts included in your tax return that were also taxed in Timor-Leste - for example, termination payments and allowances

    (m)

    $0

    (m)

    $

    Add (l) and (m)

    (n)

    $86,400

    (n)

    $

    Multiply (n) by 0.2. The amount at (o) is the tax paid to Timor-Leste on your JPDA income that is also taxed in Australia. If using e-tax, show the amount at (o) in the 'Foreign tax withheld' column, item 19 (screen 2308).

    (o)

    $17,280.00

    (o)

    $

    If (o) is equal to or less than (k) leave (p) blank and go to the next step. If (o) is greater than (k):

    • show the excess at (p) - this excess amount can be carried forward for up to five years and applied as a credit against future JPDA income
    • include the amount at (k) at O item 19 on page 10 of your tax return (supplementary section), then go to Part 2.
     

    (p)

    $

    (p)

    $

    Your excess foreign tax credit relating to JPDA income carried forward from any of the last five years (if any). If using e-tax, show this amount at 'Other foreign income' (screen 2318).

    (q)

    $0

    (q)

    $

    Add (o) and (q). This is your foreign tax credit for your 2004-05 JPDA income

    (r)

    $17,280.00

    (r)

    $

    If (r) is greater than (k):

    • show the excess at (s) - this amount can be carried forward (see (p))
    • include the amount at (k) at O item 19, then go to Part 2.

    If (r) is less than or equal to (k):

    • leave (s) blank - there is nothing to carry forward
    • include the amount at (r) at O item 19, then go to Part 2.
     

    (s)

    $

    (s)

    $

    1. If you are using e-tax, go to Are you using e-tax? on the previous page. If you had exempt foreign employment income, see Did you have exempt foreign employment income?
    2. If (f) is greater than or equal to (h) and you have no foreign income, (j) equals (a). If the sum of (f) and your net foreign income exceeds (h), then:

                            (j) =            (a) x (f)                  
                                     (f) + net foreign income

    Go to Part 2 if you ticked D on the schedule on the back page. Otherwise go to Check that you have.

    Part 2

    Use this part if you were a resident of Timor-Leste. Otherwise proceed to Part 3.

    What you need

    • All your payment summaries for the 2004-05 income year.
    • Details of your JPDA income - from your employer or your pay slips.
    • TaxPack 2005 and TaxPack 2005 supplement if you are completing a paper tax return. See More information to find out how to get copies of these publications.

    You need to know

    Ten per cent of your income earned for work or services performed in the JPDA is taxed in Australia. Your payer should have deducted Australian tax at the minimum rate of 29% on 10% of your JPDA income.

    When completing D1 to D5, you show only 10% of your expenses relating to your work in the JPDA.

    What you need to do

    Before you start on item 1 of your tax return, complete Worksheet 3 for each payment summary that includes JPDA income.

    Worksheet 3

                                                                   Peter*                           You

    Total gross income shown on your payment summary

    (a)

    $120,000

    (a)

    $

    Total gross JPDA income included on your payment summary

    (b)

    $120,000

    (b)

    $

    Subtract (b) from (a)

    (c)

    $0

    (c)

    $

    Divide (b) by 10

    (d)

    $12,000

    (d)

    $

    Add (c) and (d)

    (e)

    $12,000

    (e)

    $

    The amount at (e) is the amount you need to include at item 1 on page 3 of your tax return.

    *See Example below.

    Example

    Peter, a labourer, was a resident of Timor-Leste for the whole year. His payment summary shows a gross payment of $120,000 and tax withheld of $3,480. His sole source of income was from the JPDA. Peter had work-related expenses of $200.

    Peter will claim $20 (that is, 10% of $200) as his work-related expenses.

    Peter will receive a tax refund of $5.80 (that is, $3,474.20 (tax payable) - $3,480 (tax withheld)).

    Go to Part 3 if you ticked D on theschedule. Otherwise go to Check that you have.

    Part 3

    Use this part if you were a resident of a country other than Australia or Timor-Leste.

    What you need

    • All your payment summaries for the 2004-05 income year.
    • Details of your JPDA income - from your employer or your pay slips.
    • TaxPack 2005 and TaxPack 2005 supplement if you are completing a paper tax return. See More information to find out how to get copies of these publications.

    You need to know

    Your net income earned in the JPDA is taxed in Australia. You can claim a rebate of 90% of Australian tax payable on that income. Your payer should have withheld Australian tax on 10% of your JPDA income.

    What you need to do

    Show all your Australian income (including all JPDA income) and deductions as instructed by TaxPack 2005 or e-tax.

    Use one of the following worksheets to calculate your rebate. Use Worksheet 4 if the only Australian income you had was JPDA income; otherwise use Worksheet 5.

    Worksheet 4

    Your taxable income as shown on your tax return

    (a)

    $

    Calculate your tax using TaxPack 2005 (see Table 2 on page 122) or e-tax*

    (b)

    $

    Multiply (b) by 90

    (c)

    $

    Divide (c) by 100

    (d)

    $

    The amount at (d) is your JPDA rebate. Include this amount at item T13 Other tax offsets on your tax return (supplementary section).

    *If using e-tax you must complete all your income, deductions and Medicare items first.

    Worksheet 5

                                                                   Gavin*                           You

    Your taxable income as shown on your tax return

    (a)

    $80,000

    (a)

    $

    Calculate your tax using TaxPack 2005 (see Table 2 on page 122) or e-tax**

    (b)

    $23,312

    (b)

     

    Divide (b) by (a) (round to at least 3 decimal places)

    (c)

    0.291

    (c)

     

    Net JPDA income (after any allowable deductions relating to JPDA income)

    (d)

    $69,900

    (d)

    $

    Multiply (c) by (d)

    (e)

    $ 20,340.90

     

    $

    Multiply (e) by 90

    (f)

    $ 1,831,681

     

    $

    Divide (f) by 100

    (g)

    $ 18,306.81

     

    $

    The amount at (g) is your JPDA offset. Include this amount at item T13 Other tax offsets on your tax return (supplementary section).

    *See Example below

    **If using e-tax you must complete all your income, deductions and Medicare items first.

    Example

    Gavin, a chef, was a resident of Malaysia for the whole year. His Australian taxable income was $80,000, of which $70,000 was JPDA income. Gavin had $100 of work-related expenses relating to his JPDA income. He has no other amount to show at item T13. Gavin uses Worksheet 5 to calculate his JPDA offset.

    Gavin's JPDA tax offset is $18,307. He includes this amount at item T13 on his Tax return for individuals (supplementary section) 2005 and prints H in the claim type box at the right of C item T13.

    Last modified: 01 Oct 2006QC 18003